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Without a replacement, killing off the Green Deal will cost SMEs

If there’s one catchword we hear time and time again from businesses operating in the UK’s low carbon economy, it is undoubtedly the word ‘certainty’.

Companies repeatedly argue that in order to invest and innovate in this fledgling industry, they must have the confidence and certainty that supporting policies are both long-term and stable, or if changes are to be made, they are consulted upon the potential implications. 

Odd then, that a government, which claims to champion both the interests of businesses and households, last week announced with no forewarning that it would no longer fund the Green Deal Finance Company (the non-profit company that delivered Green Deal loans) or offer any more vouchers through the Green Deal Home Improvement Fund.

And even stranger still, it offered no alternative policy to fill the void that will be left following the demise of the Coalition’s flagship energy efficiency policy.  

“For smaller firms however the end of the scheme may prove to have bigger consequences”

It is true that the Green Deal was by no means perfect – an overly complex and bureaucratic scheme, held back by high interest rates on loans and a lack of demand drivers.

Green Deal divide

As a result, interest from many major players in the construction industry was muted.

The larger firms who did decide to back the scheme did so cautiously.

Some were put off in 2013 when the scheme failed to take off as had been hyped and others retreated when they saw the stop-start nature of GDHIF.

Many companies decided that instead of insulating homes, they should in fact be insulating themselves against inconsistent policy making.

For smaller firms however - companies for which the Green Deal would have increasingly provided the bread and butter of their work – the end of the scheme may prove to have bigger consequences.  

These installers of energy saving measures, small contractors and Green Deal assessors will have gone through the time-consuming and costly Green Deal accreditation process that was necessary to ensure customer protection, but is now suddenly redundant. 

The Green Deal assessment process is still likely to be used for the Green Deal’s sister scheme, the Energy Company Obligation, but perhaps only until 2017 after which the future of the scheme is, you guessed it, uncertain.

Contractors specialising in solid wall insulation are also likely to feel the sharp end of these changes.

Following cuts to ECO in 2013, many came to rely on GDHIF to provide funding for solid wall jobs.

“The Green Deal is a microcosm of the Government’s approach to its wider energy efficiency framework”

No further money for GDHIF will mean these firms, which typically have larger workforces due to the labour intensive nature of installing this measure, may have to lay off workers.

The irony is that the government’s decision comes at a time when the Green Deal was finally starting to bed in.

Unfortunate timing

The latest statistics showed the number of homes to have measures installed through the Green Deal were growing steadily.

Admittedly, the numbers were still small, but they could have been the first signs of a market.

The Green Deal is of course a microcosm of the Government’s approach to its wider energy efficiency framework – the recent U-turn on the long-established zero carbon new buildings policy also coming like a bolt from the blue.

Businesses crave certainty, and the Government needs to do more to provide it.

Richard Twinn is policy advisor is at the UK Green Building Council

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